PRECIOUS-Gold inches up as investors discount Fed rate hike

BENGALURU, Sept 27 (Reuters) - Gold prices edged higher on Thursday as investors largely discounted a U.S. interest rate hike, but gains were limited as the dollar rose following reports of a row in Italy’s new government.

Spot gold was up 0.1 percent at $1,195.61 an ounce as of 0815 GMT. On Wednesday, the metal touched its lowest since Sept. 11 at $1,190.13 an ounce.

Spot gold prices have closed in a range between $1,210 and $1,190 an ounce since Aug. 28.

U.S. gold futures were up 0.1 percent at $1,199.90 an ounce.

“The fact that the Fed didn’t come out as overly hawkish meant there was some positivity felt through emerging market currencies. This may be playing in gold being gingerly bought,” said Stephen Innes, APAC trading head at OANDA in Singapore.

“We are still big sellers towards $1,200 an ounce and buyers towards $1,190 ... Bargain hunting is definitely coming to the equation at the lower end of the scale.”

The Fed raised interest rates for the third time this year on Wednesday, and left intact its plans to steadily tighten monetary policy, as it forecast that the U.S. economy would enjoy at least three more years of growth.

“The Fed statement did not have much of an impact on the dollar and so we would venture to guess that the greenback could resume a little lower over the course of the next week or two, possibly giving gold an element of support,” INTL FCStone analyst Edward Meir said in a note.

However, there is little evidence that gold’s tight trading range will change anytime soon, Meir added.

The dollar index gained against a basket of six major currencies, supported by a dip in the euro after Italian daily La Stampa said Economy Minister Giovanni Tria “was ready to leave”, before a spokeswoman for the ministry dismissed the report.